CAD steady ahead of Cdn CPI and Retail Sales reports. USDCAD technicals better, but mediocre NY close yesterday. Overall FX vol mild despite growing US/China trade tension.

Summary

• USDCAD: Dollar/CAD regained its composure yesterday as we were expecting; trading back above the 1.2870s and then making a run for chart resistance in the 1.2920s.  However, that’s where the market stalled going into the NY close, making for an arguably mediocre closing pattern.  That mediocrity has led to a rather lackluster overnight session with USDCAD trading in a tight range.  Some of this is likely also caution ahead of the Canadian Feb CPI and the Canadian Jan Retail Sales reports, both out this morning at 8:30amET.  Traders are expecting +2.0% YoY and +0.5% MoM for CPI, and +1.2% MoM for Retail Sales, +0.9% ex-autos.  Better than expected numbers will put chart support into focus: 1.2880, 1.2870, then 1.2830.  Weaker than expected numbers will likely see the market pop into the high 1.29s.  Overall FX volatility for the broader USD was relatively mild overnight considering growing trade war tension between the US and China, but we are starting to see some USD sales come in.  Canadian futures traders added 5517 contracts in new positions yesterday, but from a lower base now (130,252 open interest) as March contracts went off the board yesterday.  This tells us that about 24k contracts in positions were not rolled from March to June (therefore liquidated) since March 13.  This will make next Friday’s COT report very interesting (we’ll learn at that point who liquidated or didn’t rollover yesterday).

   

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Market Analysis Charts

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About the Author

Erik Bregar - Director, FX Trading

Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

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